Case Law Details

Case Name : Gujarat Alkalies And Chemicals Ltd Vs C.C.E. & S.T. (CESTAT Ahmedabad)
Appeal Number : Excise Appeal No. 12765 of 2018
Date of Judgement/Order : 24/08/2021
Related Assessment Year :

Gujarat Alkalies And Chemicals Ltd Vs C.C.E. & S.T. (CESTAT Ahmedabad)

There was an interpretation that whether the portion of contribution recovered from the employee, the Cenvat credit there on can be allowed or not and the said issue has been settled by Hon’ble Bombay High Court. It is a settled law that when there is a doubt and difference of views on issue and subsequently it is settled by any court of law, the suppression or intention to evade the duty cannot be alleged in such cases. Even though the extended period was not invokable in the facts of the present case. The appellant have paid the said amount along with interest, which is not under contest.

CESTAT find that since there is no suppression of fact or misdeclaration, fraud or intent to evade duty on the part of the appellant, the penalty under section 11AC cannot be invoked.

penalty of the word on paper

FULL TEXT OF THE CESTAT AHMEDABAD ORDER

The issue involved is that whether the appellant is liable to penalty of Rs. 20, 563/- under section 11AC which was imposed for wrong availment of credit on the contribution of employee recovered by the appellant against the service of rent a cab operator service.

Shri. Dhaval Shah, Learned Counsel at the outset concedes that he is not contesting disallowance of credit of Rs. 20,563/- and the interest there upon which was already paid by the appellant. His submission is that the appellant has no intention to avail the credit of Rs. 20,563/- wrongly .The Cenvat Credit was allowed on the service portion representing only on the contribution of employee which was recovered by the appellant. Such credit is not admissible was held by the Hon’ble Bombay High Court in case of ULTRATECH CEMENT LTD -2010 (20) STR 577(Bom.) only thereafter the issue was clarified that even though the Cenvat credit on a particular service is admissible but if the contribution is recovered from the employee to that extent credit is not admissible. Therefore, there was no suppression of facts or intention to evade the duty of such amount. Therefore the penalty deserves to be set aside.

3. Shri. Dharmendra Kanjani, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order. He submits that the demand of Rs. 20,563/- was confirmed invoking proviso to section 11A (1) therefore the extended period was invoked. Once the demand is confirmed invoking proviso to section 11A (1) the penalty under section 11AC is inevitable and it is mandatory as held by Hon’ble Supreme Court in the case of Rajasthan Spinning & Weaving Mills and Dharmendra Textile Processors. Therefore, equal penalty imposed under section 11AC can neither be reduced nor be waived.

4 I have carefully considered the submission made by both the sides and perused the records. I find that the penalty of Rs. 20,563/- was imposed for wrong availment of credit under section 11AC. Under section 11AC penalty can be imposed only when the demand is confirmed invoking proviso to section 11A (1). In this case though the demand was confirmed invoking proviso to section 11A (1) and the appellant has not contested the said demand and they have paid the same along with interest. However, they are contesting the imposition of penalty on the ground that there is no ingredients existing as to the facts of this case whereby the proviso to section 11A (1) can be invoked. He submits that the credit of Rs. 20,563/- was denied for the reason that it is attributable to the contribution of input service i.e. rent a cab service. This issue has been decided by Hon’ble Bombay High Court in the case of Ultra tech, before that there was no clarity.

4.1 I agree with the submission of learned Counsel that there was an interpretation that whether the portion of contribution recovered from the employee, the Cenvat credit there on can be allowed or not and the said issue has been settled by Hon’ble Bombay High Court. It is a settled law that when there is a doubt and difference of views on issue and subsequently it is settled by any court of law, the suppression or intention to evade the duty cannot be alleged in such cases. Even though the extended period was not invokable in the facts of the present case. The appellant have paid the said amount along with interest, which is not under contest.

4.2 I find that since there is no suppression of fact or misdeclaration, fraud or intent to evade duty on the part of the appellant, the penalty under section 11AC cannot be invoked.

5. Accordingly, I set aside the said penalty and allow the appeal only to this extent.

(Dictated and pronounced in the open court)

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